STOCKS
Equities remain stable and remain bullish in the near-term. Dow has potential to move up to 29000-29500 while it remains above 28000 and then can see a corrective fall. DAX and Nikkei can consolidate sideways before moving higher again. Shanghai has come-off from its range resistance and can move down within its sideways range. Sensex and Nifty had tumbled yesterday following the news on fresh tensions at the India-China border. However, they have strong supports coming up that can limit the downside and take it higher again to keep the broader bullish view intact.
Dow (28430.05, −223.82, -0.78%) has dipped below 28500 but is likely to get support at 28350 and then slightly deeper at 28000. While above 28000, the near-term bullish view is intact to see 29000-29500 on the upside. As we have been mentioning for some time, we would be cautious to see a sharp corrective fall anywhere from the 29000-29500 region.
DAX (12945.38, −87.82, -0.67%) remain below 13200. As mentioned yesterday a dip to 12800 and a range bound move between 12800 and 13200 can be seen for some time. The broader bias however remains bullish and we expect the DAX to breach 13200 eventually and move up to 13800 in the coming weeks.
Nikkei (23177.06, +37.30, +0.16%) remains stable above 23000. A sideways consolidation between 23000 and 23500 is possible for a few days before an eventual rise to 23800-24000 happens. 24000 is a strong resistance from where we expect a sharp corrective fall. In case of a break below 23000 now, then a dip to 22500 can be seen and a broader range of 22500-23500 is possible.
The 3450-3470 resistance has held very well and the Shanghai (3389.59, −6.09, -0.18%) has come-off sharply. While below 3400 a dip to 3350-3300 can be seen again. 3250-3450 is a possible range that can be seen in the near-term within its broad 3180-3470 sideways range.
Nifty (11387.50, -260.10, -2.23%) tested 11800 in line with our expectation and had come-off sharply to close below 11400. However, strong support is in the 11300-11200 region which can limit the downside. We can expect the Nifty to bounce-back again towards 11800 and keep the broader bullish view intact.
Sensex (38628.29, −839.02, -2.13%) on the other hand has come-off sharply after testing 40000. It has support in the 38300-38000 region which is likely to hold and push the index higher back to 40000 levels again.
COMMODITIES
Crude prices have dipped slightly but continue to keep the bullish view intact for the near to medium term. Fresh leg of Dollar weakness is again putting upward pressure on the precious metals as Gold and Silver look potentially bullish and ready to re-test recent highs of 2100 and 30 respectively. Copper has broken above resistance at 3.05 too and could now be headed towards 3.15/20 soon. View is overall bullish for most commodities as Dollar continues to weaken.
Brent (45.68) and WTI (42.94) have dipped slightly but look bullish for a rise towards immediate resistances near 47.50 and 44-45 respectively. Broader view is bullish for an eventual break above mentioned resistances.
Gold (1991.00) rises back towards 2000 and is probably ready to see another rise towards the recent highs of 2100 as Dollar weakness may continue to put upside pressure on the precious metals.
Silver (28.89) too has risen well and looks bullish for a rise towards 30 in the near term. View is bullish.
Copper (3.0570) has finally moved up breaking above 3.05 but this rise needs to sustain in order to keep the upside momentum intact and eventually take it higher towards 3.15/20 in the near term.
FOREX
Dollar Index breaks below 92 to indicate fresh bearishness that could continue to keep other currencies strong against the Dollar. EURJPY, Aussie, Pound, Euro, Yuan, Yen and Rupee all look strong for the day and could be headed to higher levels that is likely to sustain for the near term. A break in Dollar Index below 91 could keep the current momentum strong for some more time.
Dollar Index (91.83) has broken below the important level of 92, triggering another leg of fall that may well extend to 90-89 in the near term. The index looks strongly under bearish influence. An eventual break below 91 could quicken the fall towards 89 in the medium term. Watch for a possible bounce from 91 which if seen could be short lived. We had mentioned a range of 94-92 to hold for sometime which now stands negated.
Euro (1.1987) has risen well on weakness in the Dollar Index. On a break above 1.20, we may have to rise the upside target to see a possible move towards 1.22/23 in the medium term. This is possible only if the Dollar Index breaks below 91 to target 89 levels.
EURJPY (126.67) has again shown signs of rising and could test 127-128 soon. View is bullish for the near term.
Dollar-Yen (105.65) has been dragged lower along with the falling Dollar. A re-test of 105 or even lower could be on the cards for the near term.
Aussie (0.7405) has moved up breaking above immediate resistance at 0.74. The struggle for Aussie to break past 0.74 seems to have ended now. A break above 3.05 in Copper (comex) and supporting weakness in Dollar has pulled up Aussie higher and while Copper continues to move higher, we may expect a rise in Aussie too towards 0.76/77 initially and maybe higher in the longer run.
Pound (1.3404) is also looking bullish and could be headed towards 1.3575 on the upside in the next few sessions. View is bullish.
USDCNY (6.8221) continued its weakness as Dollar weakness boosted the already falling pair. We may look for a reversal from 6.80 in the near term.
USDINR (73.6150) may hold well below immediate resistance at 73.80 today. Looking at the movement in other currencies, we may expect a possible gap down opening on USDINR with a possible test of 73.25/10 on the downside.
INTEREST RATES
The US Treasury yields have dipped further but have supports that can limit the downside. The outlook is bullish and we expect the Treasury yields to move higher in the coming weeks. The German Yields remain stable and remain bullish to move up further in the near-term. The 10Yr GoI has declined sharply yesterday. A near-term corrective dip looks likely before the broader uptrend resumes.
The US 2Yr (0.13%), 5Yr (0.27%), 10Yr (0.71%) and the 30Yr (1.48%) Treasury yields have dipped further yesterday. Support is in the 0.70%-0.68% region while above which the bias remains bullish to see a test of 0.80% and even 0.90% on the upside in the coming weeks. The 30Yr has dipped below 1.50% but can find support in the 1.45%-1.40% region. While above 1.40%, the outlook is bullish to see a rise to 1.65%-1.68% in the coming weeks.
The German 2Yr (-0.66%), 5Yr (-0.63%), 10Yr (-0.40%) and the 30Yr (0.06%) remain higher and stable. The near-term outlook is bullish. The 30Yr has support at 0% and -0.05%. While above these supports the 30Yr can move up to 0.25%-0.30% in the coming weeks. The 10Yr on the other hand can move up to -0.30%.
Contrary to our expectation the 10Yr GOI (6.0819%) has declined below 6.10%. This will delay the rise to 6.30%-6.35% that we have been expecting. While below 6.10%, a dip to 6%-5.99% is possible in the near-term. However, while above 5.99%, the broader view continues to remain bullish to see a rise to 6.30%-6.35% eventually over the medium-term.
